Primary bond market

The market is well-positioned for February, after January's near-record tax-exempt supply, said J.P. Morgan strategists led by Peter DeGroot.

Issuance was $34.308 billion in 471 issues, down 7.2% year-over-year from $36.982 billion across 536 transactions in 2025. However, this was the third-highest monthly figure for January and above the month's 10-year average of $29.699 billion

Munis were largely unchanged this week and tax-exempts continue to be "quite unattractive" at current levels, said Barclays strategists led by Mikhail Foux.

Wells Fargo Securities will price for the Chicago Transit Authority $575 million of first and second lien sales tax receipts bonds on Thursday, Feb. 5.

The District of Columbia deals will bring a mix of new money and refunding bonds with a variable-rate component.

Over the past five years, January has seen a relatively stable market tone, said Jeff Timlin, managing partner and head of municipal bond investing at Sage Advisory.

"Markets are reading this as a strategic pause, not a policy shift," said Gina Bolvin, president of Bolvin Wealth Management Group.

The muni market has rebounded from the technical pressures of the first half of last year — a result of surging issuance — said John Miller, head and CIO of First Eagle's municipal credit team.

The city's Department of Water and Power, which saw spreads widen after last year's deadly wildfires, upsized a revenue bond deal amid strong investor interest.

The top two municipal bond insurers wrapped over $41.828 billion in 2025, up from $41.166 billion in 2024, data shows.

Munis were steady Monday following the large cuts the asset class saw last week, specifically on Tuesday, Jan. 20.

Munis were the best-performing U.S. fixed-income asset class through the first three weeks of January, but the strong performance has created some problems, Barclays strategists said.

It could signal the issuer did not get the best price during a negotiated deal, officials said.

This would be the state's first bond issuance since 2023.

"Of all these headlines, there's no direct concern for the muni market or municipal issuers. It's just tangential concerns of what this does for the economy and rates," said Brad Libby, fixed income credit analyst at Wellington Management and a fixed income portfolio manager with Hartford Funds.

Current events and financial developments outside of the muni sector mean that investors should hold off buying munis until rates correct, said Matt Fabian, president of Municipal Market Analytics.

The rates market is "on edge" as global fiscal and geopolitical pressures collide, said James Pruskowski, managing director at Hennion & Walsh.

The new-issue calendar is an estimated $10.836 billion, with $6.979 billion of negotiated deals on tap and $3.857 billion of competitives.

"We're starting off from a really high tax equivalent yield and that really starts the market from a position of strength," said Matt Norton, CIO for municipal bonds at AllianceBernstein.

January got off to a good start, with muni yields rallying through Jan. 7. Since then, yields have been steady to slightly richer in spots, with muni yields seeing some strength in the front end and belly of the curve.